Electric shock: China power demand drops as coronavirus shutters plants
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China Industrial Power Demand 2020 highlights COVID-19 disruption to electricity consumption as factory output stalls; IHS Markit estimates losses equal to Chile's usage, impacting thermal coal, LNG, and Hubei's industrial load.
Inside the Issue
An analysis of COVID-19's hit to China's electricity use, cutting industry demand and fuel needs for coal and LNG.
IHS Markit estimates a 73 TWh drop (~1.5% of industrial demand).
Loss equals Chile's annual electricity consumption.
Equivalent to ~30 Mt coal or ~9 Mt LNG not burned.
Hubei peak load 21% below plan; industrial utilization depressed.
Severe-case outlook: GDP 4.2%, power demand growth trimmed to 3.1%.
China’s industrial power demand in 2020 may decline by as much as 73 billion kilowatt hours (kWh), according to IHS Markit, as the outbreak of the coronavirus has curtailed factory output and prevented some workers from returning to their jobs.
FILE PHOTO: Smoke is seen from a cooling tower of a China Energy ultra-low emission coal-fired power plant during a media tour, in Sanhe, Hebei province, China July 18, 2019. REUTERS/Shivani Singh
The cut represents about 1.5% of industrial power consumption in China. But, as the country is the world’s biggest electricity consumer and analyses of China's electricity appetite routinely underscore its scale, the loss is equal to the power used in the whole of Chile and it illustrates the scope of the disruption caused by the outbreak.
The reduction is the energy equivalent of about 30 million tonnes of thermal coal, at a time when China aims to reduce coal power production, or about 9 million tonnes of liquefied natural gas (LNG), IHS said. The coal figure is more than China’s average monthly imports last year while the LNG figure is a little more than one month of imports, based on customs data.
China has tried to curtail the spread of the coronavirus that has killed more than 1,400 and infected over 60,000 by extending the Lunar New Year holiday for an extra week and encouraging people to work from home, measures that contributed to a global dip in electricity demand as well.
Last year, industrial users consumed 4.85 trillion kWh electricity, accounting for 67% of the country’s total, even as India's electricity demand showed sharp declines in the region.
Xizhou Zhou, the global head of power and Renewables at IHS Markit, said that in a severe case where the epidemic goes on past March, China’s economic growth will be only 4.2% during 2020, down from an initial forecast of 5.8%, while power consumption will climb by only 3.1%, down from 4.1% initially, even as power cuts and blackouts raise concerns.
“The main uncertainty is still how fast the virus will be brought under control,” said Zhou, adding that the impact on the power sector will be relatively modest from a full-year picture in 2020, even though China's electric power woes are already clouding solar markets.
In Hubei province, the epicenter of the virus outbreak, the peak power load at the end of January was 21% less than planned, mirroring how Japan's power demand was hit during the outbreak, data from Wood Mackenzie showed.
Industrial operating rates point to a firm reduction in power consumption in China.
Utilization rates at plastic processors are between 30% and 60% and the low levels are expected to last for another two week, according to ICIS China.
Weaving machines at textile plants are operating at below 10% of capacity, the lowest in five years, ICIS data showed. China is the world’s biggest textile and garment exporter.
